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TMI Blog1972 (10) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... istribution of cloth under its supervision and control. Three categories of dealers in the new set up were classified. Under this scheme they were known as importers, semi-wholesalers and retailers. Government selected and appointed certain people out of the wholesale dealers of cloth who were importers of cloth from other States as a group of importers. These importers were not permitted to do business in cloth except as directed by the Government ; no person other than a person or a party who was selected in the importers' group could import textile cloth into the area. Pursuant to this policy, in Akola District, five dealers whose names are specified in the statement of case were appointed as a group of importers for the district. At eac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Appellate Assistant Commissioner, an application was made in the alternative for registration of the partnership-firm. Such application for registration was rejected by him on several grounds stated in his order. On appeal by the assessee, the Tribunal held that the scheme of distribution of cloth was organised and carried out by the Government through the above persons ; that no business was carried on in partnership and that it accordingly set aside the order passed by the Income-tax Officer. Mr. Joshi, on behalf of the revenue, has contended that all essential ingredients required to constitute a partnership in law are fulfilled ; that there was an agreement entered into by all the members of the group of importers concerned ; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under the scheme. Thus, there is no evidence whatsoever that an agreement existed between the persons concerned to form a partnership of the importers' group. The matter, however, does not rest there. It is further required that before the partnership is formed, the business must be carried on by all or any one of the persons concerned, acting for all In view of the scheme and policy laid down by the Government, it is the nominee chosen by the Government who has to do the work of distribution of cloth to semi-wholesalers. Thus, there is no agency inter se between the members of the group but a man chosen by the Government has to do the work of distribution. In what manner the business is to be carried on is not even left to the discreti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i-wholesalers in accordance with the orders of the Government. The quota of goods to be supplied to each semi-wholesaler was fixed by the Government but the goods were not to be supplied to him but were to be received from the importer by a nominee of the semi-wholesalers appointed by the Government on behalf of all. These semi-wholesalers supplied the finance to the nominee in proportion to the quota. After the monthly quota was distributed to the retailers the nominee returned the capital supplied by such semi-wholesaler and paid him his share of the excess of receipt over expenditure. Eleven semi-wholesalers were assessed as an unregistered firm to income-tax as well as excess profits tax. The Tribunal was of the view that the relation o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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